MESSENGER POST MEDIA

RETIREMENT
&

2018
ESTATE
PLANNING

Advertising supplement to Messenger Post Media for the week of March 18, 2018

Daily Messenger • Victor Post • Wayne Post

The Post serving Brighton, E. Rochester, Fairport, Henrietta and Pittsford
RETIREMENT & ESTATE PLANNING 2018 • PAGE 2
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Succession Planning
HOW WILL YOUR BUSINESS SURVIVE WITHOUT YOU?
SUBMITTED BY ARNIE PECHLER, SR. | UNITED PROFESSIONAL ADVISORS

You have built a successful business through

countless acts of sacrifice. Long hours, low or no pay,
sleepless nights and limited vacations. However, you
have now built a business that employs several loyal
employees and makes a difference in the lives of your
customers and community.
You have spent a long time working in your business,
but have you spent the proper amount of time and
planning working on your business?
Statistics tells us that at this point there is a major
disconnect. Approximately 88% of surveyed business
owners believe that their same family or families will
control their business five years after they retire, die
or become disabled. However, only 30% of family
businesses survive into the second generation and
only 12% to the third generation.
The top ten reasons that businesses are not
successfully transferred are:

1 4
CLARITY POOR COMMUNICATION
Not having a clear and organized succession plan. Open, participative and transparent communication is a must.
There is a critical need to create an overall business Timely scheduled meetings are a necessity.
succession plan.

2 5
MONEY NO RETIREMENT SECURITY
Not having a coherent plan on how the transition Not providing enough financial security to the senior generation.
will be financed to the next generation. Conflicting A solid succession plan requires the older generation to retire
interests is a common problem. Determining the with enough assets to ensure that money is not the reason to
true value of the business created is critical. remain in control forever.

3 6
SIBLING DISCONTENT DELAY
Assuming that all of the children and other relatives Waiting too long to pass on the equity of the business. The
will get along, even with equal ownership, may not sooner that you can pass on or transition the business to the
be well-founded. next generation, the easier it will be for the next generation to
become more responsible and accountable.
 RETIREMENT & ESTATE PLANNING 2018 • PAGE 4

7 9
ENTITLED FAMILY MEMBERS FORGETTING THE PROCESS
Not just guaranteeing someone a job because of their family Succession of a family business is not an event but a process.
connections. Making sure the next generation is qualified and Adopting a process of strategic planning allows everyone to
has the skills, experience and passion to do the job is critical to participate, debate and agree upon the broad direction the
the future success of the business. business is taking. This process should include as many of the
owners as possible.
8 10
PASSING THE TORCH LOSING CREDIBILITY
Not keeping the passion flame lit. The family and key owners
One of the greatest issues for the next generation is establishing
need to be involved and willing to carry on as owners,
credibility within the firm and with clients and customers.
maintaining the original owner’s drive and passion.

To sum up, research indicates that failures can
essentially be traced to one factor, an unfortunate
lack of family business succession planning. So, what
is the solution? Assemble a team of specialists who
can help you with the process and keep you moving
forward. This will usually include a financial advisor,
accountant and attorney all of whom know enough
and care enough to help you and will work as a team
to accomplish your goals. Remember this is a process,
the first step is to get started!
Arnie Pechler M.B.A, Certified Financial Planner™ is
managing partner at United Professional Advisors. He
has been helping business owners and people nearing
and in retirement, make smart money decisions for
almost 40 years. He can be reached at 315-502-4183 or
Arnie@unitedprofessionaladvisors.com.
 RETIREMENT & ESTATE PLANNING 2018 • PAGE 5

Retirement readiness
HIT TING THE RETIREMENT SWEET SPOT
A recent study by the Center
for Retirement Research (CRR)
at Boston College suggests an
alarming state of awareness
about retirement readiness:
Of surveyed households, 33
percent realize they are not well
prepared, 19 percent are not well
prepared but don’t know it, and
24 percent are well prepared but
don’t know it.
For the Americans at risk of
not being able to maintain an
adequate retirement lifestyle,
it’s critical to take action. For
the households that are well
prepared and don’t know it, they
risk sacrificing a comfortable
retirement. Understanding the
behaviors associated with good
retirement planning, in turn, can
help you get a better sense of
where you stand. Consider the
following behaviors, which are
more likely to be modeled by
those who are well prepared for
retirement. increase the risk you will deplete your assets minimized or paid down as quickly as
too soon. possible. Credit card debt, which carries high
ASSET ACCUMULATION interest rates, should be avoided entirely.
BUDGETING Remember, each dollar of debt limits your
A high-level approach to
ensuring adequate retirement Not all budgets need to detail specific ability to save for the future.
assets is to save a minimum of spending items. Rather, you can consider
yourself working within a budget if you MORTGAGE DEBT
10 percent of your gross income
each year. You may need to save know that each year you are saving and not It used to be commonly accepted that you
even more depending on your creating new debt (and paying off legacy pay off your mortgage before retirement,
asset accumulation goals and debt for your education or home). If you want but more and more retirees are entering
how many years you have left to to squeeze out more savings, a line-by-line retirement with mortgage debt. The old
save before retirement. review of spending may well be fruitful. rule remains the best approach, since any
indebtedness in retirement will limit your
If you would rather have a dollar PERSONAL DEBT ability to react and adjust to poor investment
goal, multiply your annual Many of us are saddled with personal debt return on your assets.
income goal by 25 to arrive at the from college and graduate school. This
amount you should try to save. debt has become so burdensome that the SOCIAL SECURITY
For example, if after considering customary progression to home ownership With traditional pension plans less commonly
Social Security and any pension has been delayed for many. The debt has offered by employers, Social Security has
payment, you want $30,000 more also had a domino effect on the ability to become an even more important source
of annual income in retirement, save for retirement. Paying down personal of guaranteed lifetime retirement income.
you will need to save $750,000. debt should be job one. Other personal debt, By waiting to age 70, you can increase the
Lower goals mean you need to such as for a car purchase, should be avoided, benefit payment significantly, which is also
withdraw at a faster rate and
 RETIREMENT & ESTATE PLANNING 2018 • PAGE 6
the base for annual Social Security cost-of-living increases for
the rest of your life. That increased Social Security benefit may
also increase the benefit that a surviving spouse will receive
after you die. Unless you have a health care issue that could
reduce your life expectancy and no spouse who might need a
spousal benefit based on your earnings record, claiming Social
Security early is the greatest retirement planning mistake made.
HEALTH CARE
Health care is the single greatest cost in retirement, and various
studies estimate the cost to be $250,000 or more for a healthy
65-year-old couple. The cost of health care will be even greater
to the extent one retires before age 65 and Medicare eligibility.
Moreover, health care costs can vary and may come sooner
than expected. The best plan, then, is to work until at least
age 65 and understand that health care is a unique challenge
in retirement. To the extent possible, utilize Health Savings
Accounts and bank any unused amounts annually to build up a
tax-free health care fund for retirement.
INCOME PLANNING
No later than 10 years before your planned retirement, you
should be translating your retirement assets into an annual
or monthly retirement income stream. Start with your Social
Security and any pension plan payments as your income base,
and then consider how much income your other assets can
safely generate. Depending on this analysis, you may want
to consider purchasing an annuity to make more of your
retirement income guaranteed and avoid the twin risks of poor
investment return and living longer than expected.
Consider also that many of your retirement assets have an
embedded tax liability. You will need to look through your
retirement assets to determine after-tax income, since your
food, rent and cable bills are paid with after-tax money. Only
by seeing your after-tax income can you decide if you have
enough to live on.
ANNUAL FINANCIAL WELLNESS CHECK-UPS
During your early working years, you are likely to be focused
on debt reduction and asset accumulation. As you get closer to
retirement, you will need to focus on the strategies associated
with Social Security, health care and income generation. At
all times you should annually revisit your goals and make
adjustments, as needed, to how much and where you are
saving, how much you are spending, how aggressively you are
investing, and when your target retirement date is.
Modeling such behaviors will make it more likely you will be
well prepared for retirement. By doing so you will also make
it more likely that you are properly assessing the state of your
retirement readiness and not over- or underestimating your
financial health. [BPT]
 RETIREMENT & ESTATE PLANNING 2018 • PAGE 7

It isn’t too late

HOW TO CATCH UP ON RETIREMENT SAVINGS
BY MONEY LIVING

A lot of people stress the

importance of starting a
retirement fund early, but
many people don’t keep up

MORE CONTENT NOW ILLUSTRATION

with their retirement fund or
even make one at all until it
seems like it’s too late.
However, there are plenty
of ways to start saving
money to catch up with your
retirement plan.

SET A GOAL INVESTING IN A 401(k)

A good start to catching up on your retirement fund is setting
a realistic goal for the minimal amount of retirement savings
that you’ll need. The essentials are really all that you’ll need
to consider at this point. Once you’re more caught up on your
savings, you’ll be able to set the bar higher.
EVERY BIT COUNTS
You should start saving money as soon as you can. Even a few
dollars or a few cents is useful to your retirement fund. Even if
you don’t have specific accounts or investments in order, you
can still start saving up some cash to put into the fund later.
GET OUT OF DEBT
Debt is one of the many things that can destroy a retirement
fund. Take care of as much debt as you can at the moment, and
create a plan to lower your debt in the next few years. This is
another area where every little bit counts. Even the smallest
contribution toward lowering your debt can save you from
hassle in the future.
CREATE A BUDGET, MONITOR SPENDING
Creating a budget is a great way to decrease your spending
and maximize your savings for your retirement fund and future
investments. Monitor your spending to get a good idea of what
your weekly or monthly budget should be. Monitoring your
spending also will allow you to get a good idea of where to set
your base savings goal for your retirement fund.
If your employer has a 401(k) plan set up for all employees, take
advantage of it. Sign up and start contributing. Contribute as
much as you can whenever you are able to, and keep making
contributions whenever you can.
SELLING, RELOCATING AND DOWNSIZING
If your children have left the house and you have unused
bedrooms and space, consider moving to a smaller house to
save on mortgage payments, heat, electricity, air conditioning
and more. Selling your old house also will allow you to gain
some extra money for your retirement fund. If you’re currently
renting your house, downsizing to a smaller home will likely
save you money on rent and utilities. Selling old items that you
no longer need in yard or garage sales or on the Internet also
can build up a good amount of money for your retirement fund.
CONSIDER A SECOND JOB
Even if it’s just part-time and minimum wage, it’s still extra
income that can be invaluable to your retirement fund. Look
around for a second job that won’t interfere with your current
job. Manage your time wisely, and ensure that you can handle
the stress of two jobs before taking another one on.
PUT OFF RETIREMENT
If you need some extra time to save, extend your deadline for
retirement. It may be disappointing, but it will allow you to save
up more money and live more comfortably when you do retire.
 RETIREMENT & ESTATE PLANNING 2018 • PAGE 8
WHY WOMEN NEED TO REASSESS
retirement planning
Men and women are not
the same when it comes to
retirement planning. Consider
this: A husband and a wife of
the same age, earning the same
salary and looking to retire
during the same year need to
account for different factors in
retirement planning. This is true
even if they share a household,
hold joint responsibility for
their finances and equally
contribute to the amount of
incoming funds.
Despite a remarkable career
trajectory and rapidly changing
roles in the workplace, women need to account for longer
life spans as well as unique career patterns. Many women are
feeling the impact of these differing retirement realties.
“According to a recent Merrill Edge Report, nearly six in
10 women fear not having enough money throughout
retirement, and their amounts are notably higher than their
male counterparts,” says Sharon Miller, head of National Sales
for Preferred Banking and Merrill Edge at Bank of America.
“It’s important that both women and men recognize the
retirement landscape is changing, and proactively address the
factors and situations that are personally unique to them to
help ensure a financially secure retirement.”
So what can women do to better prepare? How can they plan
to address these factors and live comfortably in retirement?
Here are a few important tips to help you pursue your
investment goals:
Start now to maximize your contributions. Save and
invest as soon as you can through your employer-sponsored
retirement plan, such as a 401(k) or 403(b) account, or set
up an automatic transfer from
your bank or brokerage account
into a personal IRA, Simplified
Employee Pension (SEP-IRA) or
SIMPLE IRA. Whatever options
you choose, aim to increase
and diversify contributions
as frequently as possible. But,
remember that diversification
doesn’t ensure a profit or protect
against loss in declining markets.
Take advantage of unexpected
money. If you receive a
significant influx in funds, such
as a lump-sum bonus, insurance
payout, tax refund, divorce
settlement or inheritance, avoid the lure of spending frivolously
and think about the long-term. If you are willing to assume the
risk, consider investing some, or even all of the funds.
Try not to sacrifice growth for safety. Guard against being too
passive in your approach to retirement investing. Be strategic
by increasing your level of involvement and make investment
decisions based on your retirement liquidity needs and risk
tolerance, which is essential to building a robust portfolio.
Take care of your health now. Practicing preventive healthcare
can make an impact on your bottom line by lowering healthcare
costs and allowing you to contribute more to your long-term
future. It can also help cut costs during retirement and will
hopefully lead to a longer and healthier life, too.
Consider waiting to collect Social Security. While everyone’s
situation is different, if you can delay retirement, you may be
able to reap significant rewards. By working longer or using
income from other sources first, your Social Security benefit
grows 8 percent each year until you reach age 70 in the current
market.
The bottom line is that while both men and women should
invest as much as they can, as early as they can, women
face some different realities when it comes to planning for
retirement. For additional resources on how to better prepare for
the changing retirement landscape, visit www.merrilledge.com/
retirement. [BPT]
Banking products are provided by Bank of America, N.A., and affiliated banks,
Members FDIC and wholly owned subsidiaries of Bank of America Corporation.
Merrill Edge® is available through Merrill Lynch, Pierce, Fenner & Smith Incorporated
(MLPF&S), and consists of the Merrill Edge Advisory Center (investment guidance)
and self-directed online investing. MLPF&S is a registered broker-dealer, Member
SIPC and wholly owned subsidiary of Bank of America Corporation. Investment
products: Are not FDIC insured, are not bank guaranteed and may lose value.
RETIREMENT & ESTATE PLANNING 2018 • PAGE 9
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Across the nation, thousands of seniors have used a Home
Equity Conversion Mortgage (HECM), commonly called a
reverse mortgage loan, as a savvy way to access the equity in
their homes as part of their retirement strategy.
Those who are interested in a reverse mortgage loan should
know that there are six main phases to the process: 1) educating
and qualifying, 2) counseling, 3) approval, 4) funding, 5) using
and 6) settling.
EDUCATING AND QUALIFYING
The HECM process begins by contacting an FHA-approved
lender who will review the borrower’s situation, educate them
on the HECM program, and determine if they would likely
qualify for a reverse mortgage loan.
“Once the lender has determined that the borrower is eligible,
they work closely with them to shape the loan so it fits their
needs,” says Paul Fiore, Chief Sales Officer for American Advisors
Group, the leading reverse mortgage lender in the nation. “At
AAG, this is a highly personalized process designed to give the
borrower the best outcome for their financial situation.”
COUNSELING
Once qualified, borrowers are referred to reverse mortgage
counseling, an important consumer safeguard mandated by
the government. During counseling, a HUD-approved HECM
counselor reviews the borrower’s needs and circumstances.
They consider how the funds might best be distributed, the
financial and tax implications, and whether a HECM is right for
them. If so, an application is submitted to the lender.
APPROVAL
Next, the property will be appraised, and after that the approval
process will begin. Before closing on the loan, borrowers
will choose between several loan disbursement options,
from taking it all out in a lump sum, receiving fixed monthly
payments, opening a line of credit or any combination.
HOME EQUITY
CONVERSION
MORTGAGES
An
underutilized
retirement
strategy
FUNDING
After the closing papers are signed, the homeowner has three
business days to change their mind and cancel the loan (except
if the loan is being used to purchase a new home). After the
rescission period has passed, the funds are ready to be paid
out through the payment option selected, subject to an initial
disbursement limit that is determined by HUD.
USING YOUR LOAN
The loan servicer will generally disburse funds via direct deposit
or mail on the first business day of the month, following the
funding of the loan. The borrower can live in the home as long
as they like without making monthly mortgage payments, as
long as they continue to pay property taxes and insurance on
the home, maintain it in good condition and comply with any
other loan terms.
SETTLING YOUR LOAN
If the last surviving borrower sells or transfers the property,
passes away, or does not use the property as a principal
residence for more than 12 months, the loan has reached a
“maturity event,” meaning that the loan comes due and no
further funds can be disbursed. Borrowers also have the option
of paying off their loan in full at any time without penalty.
Following a maturity event, an appraisal will be ordered by the
loan servicer to determine the property’s current market value.
The heirs can sell the property to repay the loan, or purchase
the property for 95 percent of its appraised value. Since HECMs
are non-recourse loans, the proceeds from the sale of the home
are the only asset that can be taken to pay the loan’s balance,
even if the loan amount exceeds the value of the home.
A home equity conversion mortgage can be shaped to fit an
individual’s needs. With new consumer safeguards in place,
many seniors are discovering that it is an important part of
their retirement strategy. [BPT]
 RETIREMENT & ESTATE PLANNING 2018 • PAGE 11

THINK YOU’RE TOO YOUNG FOR

Retirement planning
THINK AGAIN!
More than half of Americans are at risk of being
unable to maintain their pre-retirement standard
of living in retirement, with younger households
in worse shape than those approaching their
retirement years.
The younger generation has already seen
a reduction in their future Social Security
benefits and are far less likely to benefit from a
guaranteed pension. With this in mind, the latest
National Retirement Risk Index, published by
the Center for Retirement Research at Boston
College and sponsored by Prudential Financial,
examined the role inheritances play in lessening
individuals’ post-retirement income shortfall.
The study showed receiving an inheritance
can have a significant impact on a household’s
overall retirement preparedness, especially for
lower- to middle-income families.
THE OVERLOOKED ASSET
When you think about a typical inheritance,
what comes to mind is real estate, personal
property and financial assets. However, often
overlooked is the fact life insurance proceeds The median shortfall for lower-income households at risk
left to a beneficiary can function in a similar manner. today is $56,986. That figure is projected to be $131,283 (in
“There is a growing concern that future generations will have a today’s dollars) when the head of the household turns age 65.
very challenging time when it comes to retiring securely,” says Middle-income households fall short by $87,489 today.
Mark Hug, executive vice president, product and marketing, That number is projected to be $197,385 (in today’s dollars)
at Prudential Individual Life Insurance. “With the decline of when the head of the household turns age 65.
guaranteed pensions, rising housing costs, rising childcare Every parent hopes to leave something to their children. With
costs and increased student loan debt, young adults may not the right financial planning, a life insurance policy may help
be contributing enough to their 401(k)s. The good news is, close some or even all of those shortfalls. Regardless of an
even a relatively modest life insurance death benefit can have individual’s current assets, the death benefit from life insurance
a meaningful impact on improving the retirement security of can be a tax-efficient way to leave a gift that may help to
the next generation.” meaningfully improve the retirement preparedness of the next
Life insurance proceeds can function similarly to an inheritance generation. [BPT]
if the death benefit is payable to a child who is the insured’s Learn more at www.prudential.com. Life insurance is issued by The
beneficiary. The transfer of wealth through life insurance has Prudential Insurance Company of America, Newark, NJ, and its
the added benefit of generally being received federal income affiliates. Our policies contain exclusions, limitations, reductions
tax free. In addition, a life insurance death benefit can make a in benefits and terms for keeping them in force. A financial
meaningful difference when it comes to quality of life during professional can provide you with costs and complete details.
retirement. Consider the following “shortfall” scenarios:

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RETIREMENT & ESTATE PLANNING 2018 • PAGE 12